Practice Issues and Contracting for Environmental Attributes in Green Energy Procurement and Certification

Practice Issues and Contracting for Environmental Attributes in Green Energy Procurement and Certification

Corporate renewable energy procurement must satisfy minimum financial metrics, but the driving motivation is the renewable energy, carbon footprint-reducing, sustainability goal-enhancing function of these transactions. This free webinar aimed at attorneys and legal practices in renewable energy will focus on defining power purchase agreement terms related to renewable energy certificates, and explore in depth how the Green-e® certification program helps buyers get the level of green they expect. The speakers will also consider how the transactions address carbon offsets and other future or potential environmental attributes, along with other terms designed to ensure renewable energy projects support, and do not undermine, buyers’ broader environmental and social priorities.

Peter Mostow, a partner at Wilson Sonsini Goodrich & Rosati (WSGR) joins M. Alexia de Pottere-Smith, General Counsel at Bay Area energy NGO Center for Resource Solutions in discussing the emerging themes around contracting for—and certification of—energy procurements in today’s volatile market, while introducing new best practices around resource eligibility.

Transcript

  1. PRACTICE ISSUES & CONTRACTING FOR ENVIRONMENTAL ATTRIBUTES IN GREEN ENERGY

    PROCUREMENT AND CERTIFICATION Peter Mostow PARTNER, WILSON SONSINI GOODRICH & ROSATI M. Alexia de Pottere-Smith GENERAL COUNSEL, CENTER FOR RESOURCE SOLUTIONS
  2. M Speakers PAGE 2 © 2020 Center for Resource Solutions.

    All rights reserved. M. Alexia de Pottere-Smith General Counsel, Center for Resource Solutions Peter Mostow Partner, Wilson Sonsini Goodrich & Rosati
  3. Defining “RECs” • “RECs” means certificates, credits, green tags, or

    other transferable indicia associated with the generation of one (1) MWh of Energy from a wind or solar energy source by a wind or solar energy facility in the United States, created under a renewable energy, emission reduction or other reporting program adopted by a governmental authority, certified under the Green-e® Energy Standard for Canada and the United States Version 3.2, or successor version. RECs include Project RECs and Replacement RECs. • “Replacement REC” means RECs generated by any wind or solar energy facility located in the United States and interconnected in ERCOT that is not the Facility. Sample PPA Clauses PAGE 3 © 2020 Center for Resource Solutions. All rights reserved.
  4. Defining “Energy Attributes” • “Environmental Attribute” shall mean any emissions,

    air quality or other environmental attribute, aspect, characteristic, claim, credit, benefit, reduction, offset or allowance, howsoever entitled or designated, resulting from, attributable to or associated with the Generated Quantity and/or the Facility that is related to the Facility’s benefits to the environment …. Environmental Attributes include carbon credits, portfolio credits, RECs, emissions allowances, environmental air quality credits and emissions reduction credits, offsets and allowances…. Environmental Attributes do not include federal, state and local tax credits, grants or other tax Incentives, any other Incentives, or Capacity Attributes. Sample PPA Clauses PAGE 4 © 2020 Center for Resource Solutions. All rights reserved.
  5. Defining Other Key Terms • “Incentives” shall mean production and

    investment tax credits based on energy production from any portion of the Facility and any other tax benefits or other financial incentives, whether federal, state or other, resulting from construction, ownership, operation, maintenance or other use of the Facility, including Production Tax Credits and similar tax credits. • “Capacity Attributes” shall mean the gross revenues with respect to any current or future defined characteristic (including the ability to generate at a given capacity level, provide Ancillary Services, and ramp up or ramp down at a given rate), certificate, tag, credit, flexibility, or dispatchability attribute, whether general in nature or specific as to the location or any other attribute of the Facility, intended to value any aspect of the capacity of the Facility to produce energy, including any accounting construct, or any other measure by the ERCOT, the FERC, or any other Governmental Authority. Sample PPA Clauses PAGE 5 © 2020 Center for Resource Solutions. All rights reserved.
  6. Defining “RECs” • “RECs” means certificates, credits, green tags, or

    other transferable indicia associated with the generation of one (1) MWh of Energy from a wind or solar energy source by a wind or solar energy facility in the United States, created under a renewable energy, emission reduction or other reporting program adopted by a governmental authority, certified under the Green-e® Energy Standard for Canada and the United States Version 3.2, or successor version. RECs include Project RECs and Replacement RECs. • “Replacement REC” means RECs generated by any wind or solar energy facility located in the United States and interconnected in ERCOT that is not the Facility. Sample PPA Clauses PAGE 6 © 2020 Center for Resource Solutions. All rights reserved.
  7. PAGE 7 • Established by CRS 20 years ago •

    Global leader in clean energy certification • Consumer protection for voluntary renewable energy purchases • Over 62 million MWh in retail transactions certified in 2018, enough to power over half of U.S. households for a month. Green-e® Certification © 2020 Center for Resource Solutions. All rights reserved.
  8. None
  9. Available at https://www.green-e.org/ppa-language • Prohibition on “eligible”, “certifiable,” etc. •

    Notes CRS intellectual property rights • Provides clauses addressing: • Applicable Standard definition • Green-e® Certification • Green-e® Verification and Audit Costs CRS Recommend PPA Clauses PAGE 9 © 2020 Center for Resource Solutions. All rights reserved.
  10. PAGE 10 Designed to “help marketers avoid making environmental claims

    that mislead consumers” • First issued in 1992 and were revised in 1996, 1998, and 2012 • Provide guidance on: “1) general principles that apply to all environmental marketing claims; 2) how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and 3) how marketers can qualify their claims to avoid deceiving consumers.” • 2012 changes included new guidance on marketers’ use of product certifications and seals of approval, claims about materials and energy sources that are “renewable,” and “carbon offset” claims. U.S. FTC Green Guides © 2020 Center for Resource Solutions. All rights reserved.
  11. 2012 Revisions • Avoid making unqualified renewable energy claims based

    on energy derived from fossil fuels; such claims permissible only if marketers purchase RECs to match their energy use • Marketers need substantiation for all their express and reasonably implied claims or must clearly and prominently qualify their renewable energy claims • No unqualified claims unless all, or virtually all, of the significant manufacturing processes involved in making a product are powered with renewable energy or non-renewable energy matched with RECs • Term ‘‘hosting’’ is deceptive when a marketer generates renewable power but has sold all of the renewable attributes of that power Green Guides on RE/RECs PAGE 11 © 2020 Center for Resource Solutions. All rights reserved.
  12. PAGE 12 © 2020 Center for Resource Solutions. All rights

    reserved.
  13. © 2020 Center for Resource Solutions. All rights reserved. Contact.

    M. Alexia de Pottere-Smith GENERAL COUNSEL CENTER FOR RESOURCE SOLUTIONS alexia.dps@resource-solutions.org 415.561.2100 Peter Mostow PARTNER WILSON SONSINI pmostow@wsgr.com 206.883.2541 www.resource-solutions.org